Rollercoaster in store as taxes go up... then down
CHANCELLOR Rishi Sunak plans to raise taxes in November’s Budget before reducing them again in time for the next general election, he has told the Prime Minister.
Boris Johnson is said to have been hit like a “bolt from the blue” by the Treasury’s Budget preparations.
But he is said to agree with the Chancellor that the Government needs to get a grip on public finances, which are £ 2trillion in debt due to coronavirus spending.
But politicians on all sides have lashed out at Mr Sunak’s plan to raise the tax burden – starting with a series of levies on the better off.
Increases to tax on company profits and capital gains have been floated, along with scrapping pension perks for higher earners.
However, Mr Sunak promised that the pain will end by the time of the next election, due in 2025.
One Whitehall insider said the increases will be spread over the “arc of the parliament” to deliver tax cuts in 2023 or 2024. But former Tory Cabinet minister David Davis told the Express: “Raising taxes now won’t work and it is not Conservative. The people it will hurt most are Conservative voters, old and new.”
The senior MP, who is threatening to lead a revolt, said: “We are already at the highest tax burden for 30 years. High taxes suppress economic activity, investment and employment.
“The smarter approach is to borrow cheaply as we look to spread the cost of the crisis, as in wartime, over 50 years and grow the economy as quickly as possible.”
Mr Sunak promised he was not plotting a “horror show of tax rises with no end in sight” when he met the Prime Minister last week.
But Labour’s shadow chancellor Anneliese Dodds said: “The Tories are floating a fiscal agenda of tax rises and more public spending cuts just so they can cut taxes before the next election.
“They’re playing politics with people’s jobs and livelihoods.”
NO ONE can envy the job of the Chancellor of the Exchequer. The task facing Rishi Sunak in trying to return the nation’s finances to some sort of working order is harder than anything that any Chancellor has experienced since the end of the Second World War.
Yet return to order they must, with Britain’s national debt now standing at more than £ 2trillion.
But there are political decisions to be made as well. Raising corporation tax, increasing capital gains taxes, imposing higher fuel duty and doing away with the “triple lock” on pensions have all been suggested as Budget possibilities but they are all profoundly un- Conservative.
What’s needed more than ever is to get the country back to work, increase productivity and encourage entrepreneurs and investors to support Britain’s recovery.
To penalise those who are prepared to work hard – and, indeed, those pensioners who have worked hard all their lives – might raise money in the short term but will not reduce the deficit in the long term.